Steel Mills largest tax payer

KARACHI - Pakistan Steel Mills (PSM) is the largest public sector tax payer to the government. The Pakistan Steel Mills pays more than Rs 8 billion worth taxes to the federal government. The PSM contributes annually Rs 6.6 billion as Sales Tax, Rs 860m as Income Tax and Rs 570m as Excise/custom duties. "PSM is facing deteriorated financial condition which has affected the mills progress very badly. PSM is the leading tax payer; if the mills go for shutdown the govt would have to lose this huge amount of revenue," said chairman PSM, Mueen Aftab Sheikh. "If the option for the shutdown of PSM is considered, over 17000 employees and their families would lose their livelihood. Indirect beneficiaries like the transporters, suppliers, labourers, shop keepers etc. would also be affected. There are 820 registered dealers who have deposited over Rs. 470 million with the PSM would also suffer as well," he said. He added that in such circumstances about 207 downstream industries might have to be shutdown while iron and steel prices in local market would reach out of access of the buyers. Importers would have monopolised the steel market. "But we have decided to keep the PSM in running condition as so many employees and their families are associated to the Pakistan Steel," said Sheikh. While giving his views on measures taken to improve the financial condition of PSM, the management has taken several steps. To improve liquidity position the import substitution policy was adopted to trade off expensive imported iron ore at $ 175/MT. This is against the local purchase of 30,000 Mt of iron ore at the rate of $70-80/MT in 3 months. Another step that has been taken by the company is that it has initiated a project for making briquettes of coke dust 0-15 mm. Around 40,000 tonnes of coke dust was wasted every year. The coke briquette made from this dust would be worth $20 Million / annum as savings, he mentioned. "PSM has also slowdown its production from 90% to 75 %. By this step the company is saving in gas, electric, and raw material cost. On the other hand maintenance/repair of plant is also going on which was long awaited," said Sheikh. Sheikh added that PSM has also started using local Sharrigh Coking Coal to the tune of 5% in the plant. The price difference between local and imported coal is $125 and $400/MT respectively. To cut down the surplus contents PSM is also procuring a desulphurisation plant to use more local coal as substitute of expensive imported coal. "We are approaching Federal Board Revenue (FBR) for imposition of regulator or antidumping duty because EU has imposed 85% duty on import of steel products from China. USA has imposed 153% dumping duty on Indian steel products. India has imposed 30% duty on import of steel products," he concluded.